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`Success of Motions to Stay Rising, But Why?
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`Summary
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`AUTHORS: LAUREN A. WATT & GRAHAM C. PHERO
`2019 to grant stay requests prior to institution of an AIA­
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`contested proceeding.
`Defendants sued for patent infringement in district court
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`Stay Factors and Trends
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`commonly seek litigation stays based on an American
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`Invents Act (AIA)-contested proceeding that assesses
`In determining whether to stay a case pending an AIA­
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`the validity of the patents-in-suit before the Patent Trial
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`contested proceeding-inter partes review, post-grant
`and Appeal Board (PTAB).1 In doing so, defendants
`review, or covered business method review-district
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`seek to avoid or reduce the high cost of district court
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`courts generally consider three factors: (1) whether
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`
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`litigation and increase settlement leverage. District
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`a stay will unduly prejudice or present a clear tactical
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`courts make a fact-dependent analysis to determine
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`disadvantage to the non moving
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`whether to grant a stay including examining, among
`party; (2) whether a stay will
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`other factors, the likelihood that a co-pending AIA­
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`simplify the issues at trial; and
`Intriguing is the reliance on SAS
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`contested proceeding will simplify the litigation.
`(3)the stage of the District
`Initially, district courts were skeptical of the efficacy
`Court case, for example,
`and the claim construction change
`of AIA-contested proceedings and stay rates were
`whether discovery is complete
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`relatively low despite Congressional intent to promote
`by some courts in 2019 to grant
`and whether a trial date has
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`judicial efficiency and avoid redundant proceedings.
`been set.5
`
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`However, since AIA-contested proceedings began in
`Since the inception of AIA­
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`2012, stay rates have generally trended upward with
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`contested proceedings in 2012
`an AIA-contested proceeding.
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`significant increases over the last two years (11% for all
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`through 2019, the grant rate for
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`motions, 12% for contested motions). These increases
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`a district court motion to stay
`appear at least in part tied to the all-or-nothing institution
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`has slowly increased to 74% of all filed (both contested
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`approach required under the SAS decision3 and the
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`and uncontested) motions, as shown in the below table.
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`PTAB's adoption of the Phillips" standard for claim
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`Contested motions for stay follow a similar trend line
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`construction. Indeed, in those courts handling the most
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`and have slowly increased to 53% since 2012.
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`patent litigation cases, stay rates are significantly higher.
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`The stay rates after the SAS decision are even more
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`Notably, in the district courts of Delaware, Eastern
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`favorable to movants in some of the hottest patent
`District of Texas and Northern District of California, stay
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`venues. Specifically, the table below highlights that the
`rates in 2019 were 70%, 73%, and 89%, respectively.
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`post-SAS stay rates in some of the most active patent
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`Perhaps even more intriguing is the reliance on SAS
`venues range from 62% to a high of 89% in the Northern
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`and the claim construction change by some courts in
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`District of California.
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`2
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`stay requests prior to institution of
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`Outcomes
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`Granted
`Denied
`Denied without prejudice
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`Denied in part granted in part
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`
`12012 12013 12014 12015 12016 12011 1201s 12019
`
`50% 68% 60% 64% 68% 63% 69% 74%
`14% 18% 18% 14% 17% 12% 11%
`9% 14% 9% 12% 14% 11% 8%
`9% 8% 8% 5% 6% 8% 6%
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`17%
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`17%
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`17%
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`n
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`6
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`152 318 337 340 296 262 262
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`Proceeding (Af/)21
`Motion to Stay Grant Rate Based on A/A-Contested
`District Court
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`Outcomes
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`Granted
`Denied
`Denied without prejudice
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`Denied in part granted in part
`n
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`
`I 2012 I 2013 I 2014 I 2015 I 2016 I 2011 I 201s I 2019
`
`40% 55% 46% 48% 49% 41% 51% 53%
`20% 21% 25% 28% 23% 27% 19%
`21%
`20% 13% 17% 14% 20% 23% 19%
`16%
`9%
`20% 12% 11% 10% 8% 9% 11%
`102 227 218 202 170 148
`Court Motion to stay Grant Rate Based on A/A-Contested
`District
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`PTAB YEAR IN REVIEW 2019
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`5
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`129
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`Proceeding (Contested Motions)
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`22
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`EX 1017 Page 1
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`25
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`District
`DED
`TXED
`CAND
`CACD
`CASD
`TXND
`WAWD
`ILND
`TXSD
`NJD
`NYSD
`FLSD
`Total
`
`Granted
`73%
`70%
`89%
`64%
`64%
`82%
`75%
`64%
`62%
`83%
`88%
`88%
`74%
`
`Denied
`without
`prejudice
`10%
`19%
`8%
`11%
`14%
`6%
`0%
`7%
`31%
`0%
`0%
`13%
`11%
`
`Denied in
`part granted
`in part
`1%
`4%
`2%
`13%
`18%
`0%
`19%
`0%
`0%
`0%
`0%
`0%
`5%
`
`Denied
`16%
`8%
`2%
`11%
`5%
`12%
`6%
`29%
`8%
`17%
`13%
`0%
`10%
`
`n
`77
`53
`53
`45
`22
`17
`16
`14
`13
`12
`8
`8
`338
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`Post-SAS Motion for Stay Grant Rate by District (All)23
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`What is Driving the Recent Uptick in
`Stay Rates
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`As shown in the above tables, over the last two years
`stay rates for all motions have increased by 11%, while
`contested stay rates have increased by 12%. Many
`factors may contribute to this increase, such as more-
`timely motions, overwhelmed district courts, and/or more
`confidence in the PTAB by courts. But likely reasons for
`the increase over the last two years may be due to recent
`changes to PTAB procedures that provide district court
`judges additional comfort in their decision to grant a stay
`pending an AIA-contested proceeding.
`First, in April 2018, the Supreme Court held that an
`AIA petitioner is “entitled to a final written decision
`addressing all of the claims it has challenged.”6 This
`overruled the prior practice of granting partial institution
`of IPR petitions, which allowed the PTAB to proceed with
`review on a subset of claims and/or invalidity grounds
`brought by the petitioner.
`Second, in November 2018, the USPTO changed the
`claim construction standard applied by the PTAB in
`trial proceedings.7 This change replaced the “broadest
`reasonable interpretation” (BRI) standard used in the
`patent examination procedure with the Phillips standard
`used by federal courts to construe patent claims. The
`impact of this change only began to be felt in mid-2019,
`as explained by the Claim Construction Change article
`in the SKGF 2019 PTAB Year in Review. These significant
`changes have influenced courts’ views as to whether
`a stay will simplify the issues at district court—likely
`leading to higher success rates for stay requests.
`
`The Impact of the SAS Decision
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`Post-SAS district court decisions suggest that courts
`are more likely to grant a motion to stay now that the
`PTAB must address and rule on every ground raised by
`the petitioner. In Nichea Corp. v. Vizio, Inc., for example,
`the court noted that a stay was likely to simplify issues
`in the district court litigation in part because “the PTAB
`[is] taking the new all-or-nothing approach to institution
`decisions, [and] there’s no concern about the PTAB
`picking and choosing certain claims or certain invalidity
`grounds from each petition.”8 Similarly, in Zomm, LLC v.
`Apple Inc., the Court stated “given that the [PTAB] must
`now issue final written decisions as to every ground
`raised in the instituted petition under recent Supreme
`Court case law, there is a real possibility that the IPR
`process will simplify the case.”9 Likewise, the Court in
`SPEX Techs., Inc. v. Kingston Tech. Corp., found that inter
`partes review held potential to simplify the case since the
`PTAB would review all the claims which the petitioner
`challenged.10 Moreover, with the PTAB addressing every
`claim the petitioner challenges, courts have recognized
`that “the PTAB will provide a more robust record that
`considers the scope and meaning of the claims, clarifies
`claim construction issues, and is preclusive on issues
`of patent validity.”11 Subsequently, the “outcome of
`the PTAB’s review of the claims will be of ‘invaluable
`assistance’ to [courts].”12
`The SAS decision has also served as the basis for some
`courts’ willingness to grant a stay pre-institution of the
`related AIA contested proceeding. For example in Lund
`Motion Prods., Inc. v. T-Max Hangzhou Tech. Co., the court
`granted a stay where the defendants’ IPR petitions covered
`every claim of three of the four patents at issue before the
`district court.13 The court noted that if instituted, the PTO
`would have to address all of the claims in those patents,
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`26
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`P T A B Y E A R I N R E V I E W 2 0 1 9
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`EX 1017 Page 2
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`thus simplifying the issues before the district court.'4 In
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`of whether the PTAB will eventually determine that the
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`19
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`Wi-LAN, Inc. v. LG Elecs., Inc., the court also granted a stay challenged claims are unpatentable.''
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`pending the PTO's institution decision.15 There, the court
`The Impact of the PTAB claim construction
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`attributed their stay decision to the recent Supreme Court
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`standard change
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`SAS decision, stating "[w]hile review is not guaranteed
`While there are no final written decisions applying the
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`and, therefore, the benefits of review are only speculative
`Phillips
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`standard, there is also some indication that
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`at this juncture, in light of the Supreme Court's mandate
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`courts are granting more motions to stay in light of
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`to review all contested claims upon grant of IPR and the
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`the PTAB's adoption of the Phillips claim construction
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`complexity of this case, the [simplification of issues] factor
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`standard. Notably, petitioners and patent owners alike
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`weighs in favor of a limited stay of proceedings until the
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`PTO issues its decisions on whether to institute IPR.'�6
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`can no longer distinguish their arguments under the BRI
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`standard in AIA proceedings from those made under
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`Nonetheless, despite the SAS tailwind, some courts have
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`Phillips
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`in district court. More fundamentally, there will
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`been hesitanttofind that changes under SAS would likely
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`likely be more consistency across the PTAB and District
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`lead to a simplification of issues. Some courts still believe
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`Court forums, as to the meaning of claim terms.
`that that even with the PTAB's review of all challenged
`claims under SAS, the extent to which the PTAB would
`In perhaps a harbinger of things to come, in Russo
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`17 Further, in at least one
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`Trading Co. v. Donnelly Distribution LLC, the court noted
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`simplify issues was likely limited.
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`case, the judge saw SAS having the opposite impact. In
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`that the PTAB's claim construction rulings would "inform
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`Peloton Interactive, Inc. v. Flywheel Sports, Inc., the court
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`the analysis required of the Court in [that] case, should
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`it continue" and referenced the new claim construction
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`denied the stay finding that any institution decision post­
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`SAS provides "a weaker inference that the PTAB will
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`20 Thus, similar to the effect of SAS, the PTO's
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`standard.
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`adoption of the Phillips claim construction standard
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`determine that all challenged claims are unpatentable."
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`The court reasoned that because the PTAB can no
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`suggests to district courts that a stay is worthwhile
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`in order to benefit from the PTAB's consideration and
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`longer partially institute IPR proceedings, the institution
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`decisions are "less effective as a barometer for the issue
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`analysis of the asserted claims.
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`18
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`"Lund Motion Prods.,lnc. v. T-MaxHangzhou Tech. Co., 2019WL 116784, at •2
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`14/d.
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`' On January 21, wg used Docket Navigator to estimate the total number of
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`(C.D. Cal. Jan. 2, 2019).
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`patent cases that wgnt to trial In 2019. The search Identified 182. Of those
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`cases, 89 or approximately 49%, Involved at least one patent that had been
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`challenged In an AIA contested proceeding.
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`' Changes to Implement Inter Partes Review Proceedings, Post-Grant Review
`"Id.
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`
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`Proceedings, and Transitional Program for Covered Business Method
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`Patents, 77 Fed. Reg. 48680 (August 14, 2012).
`
`
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`" WI-LAN, Inc. v. LG Elecs., Inc., 2018 WL 2392161, at *2 (S.D. Cal. May 22, 2018).
`
`
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`"Semco, LLC v. Trane U.S., Inc., No. 2:17-CV-04077, ECF Dkt No. 136 (W.D. Mo.
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`
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`Jan. 2, 2019).
`
`> SAS Inst. Inc., v. lancu,
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`138 s. ct. 1348, 1359, 200 L Ed. 2d 695 (2018).
`
`
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`
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`• Phillps v. AWH Corp., 415 F. 3d 1303 (Fed. Cir. 2005).
`• See, eg., Peloton Interactive, Inc. v. Flywheel Sports. Inc.,
`
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`2019 WL 3826051 '1
`
`"Id.
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`
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`391 F. Supp. 3d 946, 956 (E.D. Tex. Aug. 14, 2019); Zomm, LLC v. Apple Inc.,
`(N.D. Cal. 2019).
`20 Russo Trading
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`*2 co. Inc. v. Donnelly Distribution LLC, 2019 WL 1493228,
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`(E.D. Wis. Apr. 4, 2019).
`
`
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`"Peloton Interactive, Inc. v. Flywheel Sports. Inc., 2019 WL 3826051 *2 (E.D. Tex.
`
`
`
`
`
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`Aug. 14, 2019).
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`
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`• SAS Inst. Inc., 138 S. Ct. at 1359.
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`' 37 C.F.R. § 42.100(b); Changes to the Claim Construction Standard for
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`CHARTS
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`Interpreting Claims in Trial Proceedings Before the Patent Trial and Appeal
`" On January 10, we used Oocket Navigator to review motion to stay pending
`
`
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`Fed. Reg. 51,340 (Oct. 11, 2018).
`Board, 83
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`IPR, CBM, or PGR that were categorized as either contested motions, stip­
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`ulated motions, or sua sponte stays. We reviewed the outcomes of motions
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`• Nlchea Corp. v. V/zlo, Inc., 2018 WL 2448098, at*3 (C.D. Cal. May 21, 2018).
`
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`
`
`
`
`
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`granted, denied, granted In part, or denied without prejudice (other less
`• Zomm, LLC v. Apple Inc.,
`391 F. Supp. 3d 946, 957 (N.D. Cal. 2019).
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`common outcomes were excluded).
`
`
`
`
`"SPEXTechs. Inc. v. Kingston Tech. Corp., No. 8:16-CV-1790, ECF Dkt No. 157,
`22 This data comes from the same search
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`at 3-4 (C.D. Cal. May 16, 2018).
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`contested motions.
`"PopSockets LLCv. Quest USA Corp., 2018 WL 5020172, at *2-3 (E.D. N.Y.
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`"This data comes from the same search as note Iii above but was limited to
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`
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`Sept. 12, 2018); PopSockets LLC v. Quest USA Corp., 2018 WL 4660374 (E.D.
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`the district courts listed and was limited to all motions decided after Aprli 24,
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`N.Y. Sept. 28, 2018) (report and recommendation adopted).
`2018.
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`as note iii above but was limited to
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`Uld.
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`PTAB YEAR IN REVIEW 2D19
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`EX 1017 Page 3
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`27
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